Oil prices show increasing momentum amid oil production cut

Posted - December 13 201822:53

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Oil prices show increasing momentum amid oil production cut

Brent crude fell 5 cents to $60.15 a barrel, off the session high of $61.43 a barrel. But amid mounting global uncertainty on everything from trade and monetary policy to politics, that forecast is far from consensus.

They discussed the "state of the oil market" and energy cooperation between the two countries during a meeting in eastern Dhahran city, the minister, Khalid al-Falih, said on Twitter.

OPEC Joint Technical Committee was created on January 22, 2017 to monitor the implementation of countries' commitment to cut oil production. The benchmark NY crude was $2.11, or 4.1 percent, higher at $53.60 a barrel.

"The near-term outlook for oil remains cloudy however as USA supply continues unabated, confirmed by news at the end of last week that for the first time in 75 years, America became a net oil exporter", Cawley added.

Two U.S. major investment banks forecast low oil prices for next year and foresee rising U.S. oil output increasing overall supply in 2019 in spite of OPEC and its allies agreeing to curb production at the latest OPEC meeting in Vienna on December 7.

"Friday's agreement was a seemingly good one, or maybe we should say the best one under the current circumstances", Tamas Varga, a strategist with PVM Oil Associates, said.

"The surge in USA supply in recent months should be a reason for caution", Bank of America Merrill Lynch said in a note on Monday.

The next OPEC and non-OPEC ministerial meeting will be held in Vienna, Austria, in April 2019 to review the impact of the deal on the global oil market.

"The OPEC plus deal to curb production to the tune of 1.2 million barrels per day over the coming months has helped stabilize and potentially create a floor in crude oil", Ole Hansen, head of commodity strategy at Saxo Bank, told UPI.

USA based Capital Economics, meanwhile, sees an average of $63 a barrel over the course of 2019. Saudi Arabia is now the world's largest oil exporter. "As a result of that you could see the market getting quite scared", the strategist said. "OPEC+ may consider restoring production partly or fully to address the situation", it said.

The government of Alberta province in Canada has also ordered a mandatory cut in production of crude oil and bitumen in their province by 0.325 million barrels per day starting from January 2019. WTI was at $51.55, up roughly half a percent.

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